Federal Tax News for Individuals: January 2026

What the Taxpayer Bill of Rights Means for You

Tax season is here, and the IRS is reminding taxpayers of their rights. By law, every taxpayer is protected by the Taxpayer Bill of Rights, which outlines 10 key principles that promote fairness, transparency and respectful treatment. These include being properly informed, receiving quality service, paying only the tax legally owed and the ability to challenge or appeal IRS decisions.

Additional protections cover privacy, confidentiality, representation, finality and a fair and just tax system. When questions arise this tax season, don't handle them alone. Turn to us for guidance and to better understand your rights.

Proposed IRS Rules Clarify New Car Loan Interest Deduction

Have you taken out a new car loan? The IRS has unveiled proposed regulations on the car loan interest deduction provision under the One Big Beautiful Bill Act. For loans taken out after December 31, 2024, on new, U.S.-assembled vehicles used primarily for personal purposes, taxpayers may be able to deduct up to $10,000 annually (through 2028) in interest, whether they itemize or claim the standard deduction.

The proposal outlines which vehicles and loans qualify, how "personal use" is defined, eligibility rules and new reporting requirements for lenders. Public comments are open through February 2, 2026, with a hearing scheduled for February 24, 2026. Contact us with questions.

Which Parent Gets the Child Tax Benefits After Divorce?

After divorce or legal separation, IRS rules determine which parent can claim many child-related federal income tax breaks. Generally, the parent with whom the child spends the most nights gets the benefits. But the rules allow this "custodial" parent to release to the other, "noncustodial," parent the right to claim the child for certain tax breaks if specific tests are passed.

Even then, some tax benefits, such as head of household filing status and the child and dependent care credit, remain with the custodial parent. Also, the custodial parent may revoke the release of the right to claim the child for the tax breaks. The rules are complex. We can help you navigate them.

IRS Warns of Tax Season Phishing and Identity Theft Scams

The IRS and the Security Summit are warning taxpayers that, as tax filing season begins, identity thieves are poised to scam people into sharing personal information to file false tax returns and steal refunds.

Specific threats include phishing emails and smishing texts, where the thief impersonates a legitimate organization in the tax community, such as the IRS, a state agency or a tax software company, to try to convince the target to provide personal information, click on harmful links or send money. Having an Identity Protection (IP) PIN can protect taxpayers from tax-related identity theft. Anyone with an SSN or an ITIN can get an IP PIN. For more information on tax scams, visit the IRS website or contact us.

New Law Expands Disaster Tax Deadline Relief

When natural disasters strike, tax deadlines shouldn't add to your stress. Generally, taxpayers have had three years from the April filing deadline for the tax year to claim a credit or refund for overpaid taxes. But when the IRS extended filing deadlines for disasters such as wildfires, floods or hurricanes, the three-year period didn't always adjust accordingly.

The Disaster Related Extension of Deadlines Act, signed into law on December 26, 2025, addresses this issue. Now, when the IRS extends filing deadlines due to federally declared disasters, the period to claim refunds and credits is also extended. The new law also aligns payment deadlines with filing relief.